Defensa y Conservacion Ecologica de Intag

http://www.northernminer.com/issues/ISArticle.asp?id=85699&issue=06132008&ref=rssDaily News Friday, June 13, 2008Ecuador update: many questions, a few answersVancouver – On June 9th, fifty-two days after a mining mandate inEcuador suspended all mining activity while the government drafts newmining legislation, the government began transferring the country’smining concessions to the state.The move, entirely expected as part of the new law, has been one offew clarities to surface about what the new law will mean for foreigncompanies working in the small South American country. The mandate ofApril 18th, supported by an overwhelming majority in theconstitutional assembly, cancelled 88% of all concessions, limitedcompanies’ holdings to a maximum of three concessions, and suspendedmining activity for 180 days. Since then, little else has beendisclosed.Lawyer Raul de la Torre, partner in the leading Ecuadorian law firmPerez, Bustamante & Ponce, has been following the situation fromwithin the country and in a recent article in LatinLawyer he outlinedwhat he’s managed to discern so far.Torre writes that administrative charges will increase to US$100 permining hectare. It is unclear whether this refers to a one-time feeor an annual charge. Either way it’s a considerable cost – AurelianResources’ (ARU-T, AUREF-O) 95,152 mining hectares would cost thecompany US$9.5 million per payment, for example. Dynasty Metals &Mining (DMM-T, DMMIF-O) is in a similar position, holding 96,900hectares that could cost US$9.7 million.A second new piece of insight from Torre is that the new law willinclude a 3% to 5% royalty. He describes the royalty as “payment tothe state for exploitation of mineral resources.” Whether the taxwould be a net smelter royalty or take another form is not clear.Thirdly, Torres writes “any environmental damage from a miningconcession would be cited as cause for contract termination.” Sincemining damages the environment by its very nature, this clause couldgive the government wide-ranging power to cancel mining rights andthereby take back deposits.In addition, the role of the state mining company being created underthe law is still a subject of great debate. Torres says the nationalcompany will oversee development of any projects reserved for thestate. The question is which those projects will be.One of the members of the national assembly who introduced the bill,Betty Tola, said in the past that the new entity would hold theconcessions invalidated through the April mandate. That mandatedeclared all mining concessions in which there had been noexploration investment before the end of 2007 invalid. Similarly, anyconcessions for which no environmental impact assessment had beensubmitted by the end of 2007 were declared extinct as well as anyconcessions within natural protected areas. Finally, any concessionscarrying unpaid fees were invalidated. There is to be no compensationfor cancelled concessions.Concessions in those categories add up to 88% of the country’s issuedmining concessions. Until recently, however, the government had notformerly seized invalidated claims. According to Torre, the processof transferring invalid claims into the new national mining companyhas now begun.While that process sounds dire, in an April interview with Dow JonesNewswires Ecuadorian Mines and Oil Minister Galo Chiriboga rejectedthe notion of the new national mining company interfering withprojects currently held by foreign companies. He indicated that thestate-run company would focus on industrial mining, that is miningmatter for construction materials such as cement.The three-concession limit remains another very significant point ofconfusion. The mandate officially limited any one person or companyto holding only three mining concessions. Chiriboga has sincesuggested that this limit could be raised.The limit could disable many foreign companies from proceeding withtheir projects. Dynasty was slated to take its Zaruma gold projectinto production at the beginning of July; the 180-day miningmoratorium delayed that, of course, but the three-concession limitcould halt it permanently. Dynasty holds 125 concessions in Ecuador.Along the same lines, Corriente Resources (CTQ-T, ETQ-X) holds sometwo dozen concessions in the country, with its 25 billion lbs. ofcopper resource spread out among them.Aurelian’s Fruta del Norte deposit is, luckily, situated on a singleconcession. That being said, the company holds 39 concessions in thearea so as to control the possible deposit extensions.The questions are still far more plentiful than the answers butTorre’s insight gives a window into the law under development. Allshould become clear when the new law is published on June 27.

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DECOIN’S Work

An Update of Current Work
DECOIN was founded in January 1995 as a grass-roots environmental organization to find ways to conserve the unique biodiversity in the Intag area of northwestern Ecuador. The area is part of two of the world's most important biotic regions, the Tropical Andes, and the Chocó-Darien Western-Ecuadorian Biological Hotpots. The area of influence of our work encompasses several life zones, including tropical rain forests, and cloud forests. More...

About DECOIN

Every year, Ecuador loses another 2.3 percent of its forests - it has the highest deforestation rate in South America. In an effort to reverse the trend with local and regional eco-activism, the grass-roots organization DECOIN was founded in January of 1995.

DECOIN (Organizacion para la Defensa y Conservacion Ecologica de Intag) is a regional organization created to battle perhaps the greatest threat to the forests: the mining companies that have thousands of acres of government-granted concessions throughout the Intag.